Meridian Corporation Reports Fourth Quarter and Year End 2022 Results

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MALVERN, PA — Meridian Corporation (Nasdaq: MRBK) this week reported:

  • Net income of $21.8 million and diluted earnings per share of $3.58 for the year ended December 31, 2022, and net income of $4.6 million and diluted earnings per share of $0.77 for the fourth quarter ended December 31, 2022.
  • Return on average assets and return on average equity for the year ended December 31, 2022, were 1.18% and 13.87%, respectively; while the return on average assets and return on average equity for the fourth quarter of 2022 were 0.92% and 11.91%, respectively.
  • Net interest margin was 3.98% for the year ended December 31, 2022, and 3.93% for the fourth quarter of 2022.
  • Total assets at December 31, 2022, were $2.1 billion, compared to $1.9 billion on September 30, 2022, and $1.7 billion at December 31, 2021.
  • Fourth quarter commercial loan growth, excluding Paycheck Protection Program (“PPP”) loans, was $61.3 million, or 17.6% annualized; residential and home equity loans increased by $70.1 million.
  • Fourth quarter deposit growth was $38.9 million with an $11.6 million increase in non-interest bearing deposits.
  • Non-interest income of $41.7 million for the year ended December 31, 2022, and $8.0 million in the fourth quarter of 2022.
  • Non-interest expenses of $81.4 million for the year ended December 31, 2022, and $20.0 million in the fourth quarter of 2022.
  • The Company repurchased 123,441 shares of its common stock at an average price of $30.82 per share during the fourth quarter.
  • On January 26, 2023, the Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on February 21, 2023, to shareholders of record as of February 14, 2023.
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Christopher J. Annas, Chairman and CEO commented, “Meridian’s fourth quarter revenue of $35.8 million generated earnings of $4.6 million, or $0.77 per diluted share. The bank fundamentals were very strong, with net interest margin of 3.93% and quarterly loan growth of 8%. Loan demand has been consistent within our customer base, and we also won a number of relationships from competitors. Reduced income from our ancillary businesses, mortgage (down 46%) and SBA (down 47%) hurt bottom line results.”

“On an annual basis, we fared well in a tumultuous year. Loans grew 26%, led by commercial real estate and commercial/industrial. We also generated adjustable-rate mortgages for the portfolio, in shorter maturity buckets. I’m very pleased with a 3.98% net interest margin for the year. The change from a flush deposit environment to rapid rate increases and deposit outflows has been a challenge. Credit quality is good, and we experienced some non-performing loan payoffs. Our branch lite and customer self-service model helps control expenses.”

“Our mortgage segment experienced a 67% decline in revenue year-over-year, resulting from the rate increases and a lack of homes for sale. The low inventory has plagued the business for the last two years and is only now showing signs of subsiding. We made dramatic cuts in expense throughout the year but still ended with a $2.6 million pretax loss, our first negative year. We are monitoring applications daily and are ready to cut further if sales don’t improve.”

“The SBA business was impacted by rates, as gain on sale margins reduced and transactions slowed. We have added some new lenders and expect economic conditions to be ripe for more opportunities.”

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Mr. Annas added, “The Meridian team managed through a difficult year with the historic rate rise and other economic factors. Ironically, this year helped to illuminate the basic loan/deposit bank operations that are the engine of MRBK. Recognizing this, we will continue to grow organically, while seeking revenue diversification to make Meridian resilient against varied economic conditions.”

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